How to Invest in Discord IPO: Buy Discord Stock

As a popular San Francisco-based software company, Discord manages an instant messaging platform and mobile app where users interact over video, audio, and text. You can think of Discord as loosely similar to Meta’s Whatsapp, Pavel Durov’s Telegram, or Amazon’s Twitch. 

It’s popular within the gaming community, with Fortnite making the largest Discord server (chat room) at over 571,000 members and Minecraft at over 569,000 members. We fully expect these numbers to increase. 

As of the end of 2021, Discord touted 13.5 million active servers, a 101% increase over 2020. Similarly, it noted a 40% increase over 2020 to over 140 million monthly active users. In 2017, this number was 10 million only!

Not all of its servers remain dedicated to gaming. It’s also popular with community clubs, study groups, and international chat rooms. Further, it’s compatible with Windows, iOS, and Android. It’s able to sync (“integrate”) its data with other apps such as YouTube, Twitch, and so on.

Initially, Discord’s IPO date was expected for 2022. Yet due to market conditions, it’s more likely to occur in 2023. This estimation could change pursuant to the status of S&P 500’s current bear market. IPOs are unlikely to occur during a bear market. 

As of the end of 2021, Discord’s valuation stood at an impressive 15 billion USD, a 114% increase over 2020. This is in line with the doubling monthly active servers and a so far successful push to non-gaming sectors. 

Given that Discord rejected a 12 billion USD takeover offer from Microsoft, we expect the platform to remain independent and use any IPO proceeds to expand its service offering. 

It uniquely has the position to attract non-gamers (i.e., WhatsApp) and gamers (i.e., Twitch) alike. Thus its market share should continue to expand as the global gaming market grows approximately 9% per annum to 315 billion USD by 2027. 

Yes, you can order Discord shares before the IPO. This is known as a “pre-placement.” In theory, several brokers may allow you to do just that. However, the only one which has already announced it will make an effort to give access to Discord IPO is Freedom24.

Among other brokers, TradeStation has not announced if and when it will become available but seems open to it since they offer access to US IPOs. Please take a look at both:

1# Freedom24

Founded in 2008, Freedom Finance, the official company name of Freedom24, has already offered to its 400,000+ worldwide clients participation in 280+ IPOs, including 40,000+ trade stocks, 1,500+ ETFs, 1,000+ US Stock Options, and 147,000+ bonds on the largest exchanges in Europe, Asia, and the US.

With Freedom24, the process to participate before the IPOs feels incredibly straightforward:

1. Open an account with a minimum of 2,000 USD (the minimum for an IPO request);
2. Submit a request for the available IPO stocks before their respective IPO dates;
3. Freedom24 automatically credits your account with those shares purchased by them on your behalf (“oversubscribed” IPOs may make it difficult for your orders to be filled completely);
4. Sell your stocks after the 93-day lock-up period or purchase a forward sale contract through Freedom24 to lock your gains before the 93 days period.

To invest in Discord’ IPO, you will technically become a Freedom Finance client. Nothing to worry about here, that’s simply the name of the broker running the platform Freedom24.

Want to know more about Freedom24? Check our Freedom24 review.

2# TradeStation

Founded in 1982, TradeStation is a US broker committed to offering you the best trading experience within their rewarded platforms and brokerage services. You can trade stocks, ETFs, options, futures, and crypto with competitive pricing models.

With TradeStation, you must follow these steps:

1. Open an account with a minimum of 500 USD;
2. Download the ClickIPO app (Available both on iOS and Android);
3. Register on ClickIPO’s trading platform and select TradeStation as your broker;
4. Link your TradeStation account in the “My Account” section of the ClickIPO app

For US residents, you have zero commission trades (including the IPO stocks). For international investors, please consult their pricing here.

There is no guarantee that TradeStation will offer Discord’ IPO, still, the optionality is there. We encourage you to follow the company and wait for their official announcement. After that, ask TradeStation if they will offer it.

While this often boils down to knowledge and investing experience, you can earn a profit by investing in IPOs. Between the two brokers mentioned above, Freedom24 is the only one that provides statistical figures for its past IPO offering. So, we will present it here as a result.

Freedom24 has so far provided 265 companies, in stocks of which approved clients have been able to invest at IPO prices. On average, they earned a 53% return by the end of the stock’s lock-up period.

We strongly suggest entering your email (no strings attached!) to receive the latest statistics from Freedom24.

Generally, investing in an IPO is riskier than investing in a stock already known to the public market, either through an American exchange like the NYSE or a European exchange like the LSE. 

However, there remain a few essential items to have on your analytical checklist no matter the stock or sector. 

1. Gross revenue (“top line”);
2. The revenue drivers, such as active user or member growth;
3. Profit margins, often EBITDA as a percentage of top line; EBITDA means “earnings before interest, tax, depreciation, and amortization;
4. Its private valuation growth, earned whenever a private capital raising with major investors, hedge funds, or banks occurs;
5. Cumulative funding and current (pre-IPO) investors;
6. The management team;
7. Its competitors.

If an “IPO Filing” has already occurred, a great place to start is taking the time to read through any stock’s original prospectus available on SEC. This helps cut through the noise and hype typically surrounding an IPO. Finding such information prior to an IPO filing remains difficult, yet reputable trade journals such as Forbes, WSJ, Crunchbase, or TechCrunch provide meaningful estimates. 

With respect to Discord’s IPO, please see below, noting data is in USD and from the end of 2021 unless otherwise stated:

1. 2020 revenue count: 130 million, a 188% year-over-year (yoy) increase;
2. Monthly active user count: 140 million, a 40% yoy increase;
3. Active server count: 13.5 million, a 101% yoy increase;
4. Private valuation: 15 billion, a 114% yoy increase;
5. Total cumulative funding: 995 million, with well-known names such as Franklin Templeton, Baillie Gifford, Sony, and Dragoneer part of the current investor group;
6. Management: Discord’s CEO is Jason Citron, who alongside his former colleague Danielle Cassley already sold mobile game platform OpenFeint for 104 million in 2011; it had 100 million users at the time;
7. While Discord’s closest parallel is TeamSpeak, a primary competitor we do have info on is Twitch, which has also grown exponentially.

And there you have a quick snapshot of Discord. It’s important to remember that you want to see consistent growth over several years (at least three) without any breaks in momentum. 

Further, we suggest to estimate the possible money-generating activities post-IPO. Will they rely upon advertising? How will that affect the average user experience? Will they opt for paid or “premium” memberships?

The Bottom Line

We’re excited about Discord’s IPO, and we’re not even gamers. We don’t need to be–Discord has successfully started expanding into non-gaming sectors. 

However, they tapped into an incredibly expanding market, lifting several competitors at once: gaming. The boost provided to online gaming from coronavirus remains what analysts call “sticky.” 

Discord might provide the +50% return you’re looking for, but we suggest you conduct your own research or sit down with a professional advisor. Why not take a look at all of Freedom24’s upcoming IPOs and make a list? Or simply wait for any announcement from TradeStation and then decide which broker to use? It’s your call.